Sample Research Paper On Pestle Analysis In Kenya

Political Factors

This consists of the rules and regulations formulated by the government to control business activities in the country ((Gitari & Knighton, 2009). ). In Kenya, the political environment consists of various variables that determine the success of most organizations in the country.

Tax Policy

The latest tax system within the nation is less buoyant and very inelastic. This has led to increased rates of taxation, which has discouraged the development of small businesses in the country (Gitari & Knighton, 2009). The unfavorable tax policy has also discouraged various investors from without the country to invest in the country, with the fear that most of their revenues will end up in taxes.

Tariffs

The government of Kenya has regulated the amount of goods imported from other countries through the tariffs. Tariffs can either be ad valorem, a given percentage of the prices of the imports or specific, that is, a fixed charge on the physical amount of the imported goods. This is the tax levied on all imports (Gitari & Knighton, 2009). The reason for the tariffs is to increase the price of the imports compared to the locally produced goods. This discourages most of the consumers from buying the imported goods, expanding markets for the domestic products and services.

Political Instability

Political instability has discouraged capital accumulation in Kenya. This has been witnessed during most elections in the country. For example, in 2007, the post-election violence
contributed to the disruption of most businesses in the country, leaving the country worse off than it was before the elections (Lynch, 2011). In addition, due to lack of peace in the country, most investors have been scared away by the continuous inter-tribal wars in Kenya. This has hindered economic development of various sectors of the Kenyan economy (Gitari & Knighton, 2009).

Economic Factors

Economic factors mainly affect the cost incurred by the business in the production and distribution of their goods or services as well as the purchasing power of the consumers ((Kabeer, 2003)). This is determined by a number o factors in the economy of a country.

Economic Growth

The growth level of the economy of a nation is measured by the standards of living of the people, level of development of the infrastructure, and the levels of employment. Kenya is still in the process of developing its economy since there are high levels of unemployment, cheap imports, and most of the economic infrastructure, such as roads, is not fully developed. This has discouraged the development of various businesses, which depend on these infrastructures for their operations (Kabeer, 2003).

Inflation Rate

Inflation denotes the constant rise in the costs of commodities or services as well as the factors of production in the country (Kabeer, 2003). The Kenyan inflation rate is high and affects the operation of most businesses. An increase in price is likely to reduce the amount of a commodity consumed by the public (Kabeer, 2003). This reduces the sales, thus, leading to the failure of most businesses in the country. In addition, inflation has also reduced the purchasing power of the Kenyan currency.

Interest Rates

The interest rates in the country are determined by the central bank of Kenya, which controls the demand and supply of money in the economy ((Kabeer, 2003)). The interest rates of many banks in Kenya are high since they want higher levels of returns to maximize their profits. This has discouraged most of the investors from borrowing from the banks to start and expand their businesses (Kabeer, 2003). High interest rates have hindered the economic development of the country through entrepreneurship.

Social Factors

These are the factors, which determine the purchasing habits of the consumers and the available market for products or and services of an organization (Lynch, 2011).

Population Growth Rate

The population of a country creates the market for the products produced within or without the country. The population growth rate in Kenya is at a higher rate due to the reduced mortality rate and high birth rate (Lynch, 2011). A large population is an advantage to the businesses since it not only creates a market for the goods and services, but also provides cheap labor in the production process (Gitari & Knighton, 2009).

Age Distribution

In every population, there must be the young and the old. The majority of Kenyan population are the youth (Lynch, 2011). Kenya's life expectancy is low and can be attributed to various diseases such as HIV/AIDS (Majstorović & Lassen, 2011). In addition, the populations in the urban areas are mainly composed of the youth, who migrate to urban centers for job opportunities, leaving the old in the rural areas (Vink, 2012).

Health Consciousness

Before producing any good or service in Kenya, one must consider the health benefits and constraints it will have on its consumers. Most health organizations have created awareness of the various factors that affect the health of individuals in the country (Gitari & Knighton, 2009). Due to such health campaign and awareness there is increased attention by most of the people of their health status (Gitari & Knighton, 2009). Production of fatty food substances, for example, will be affected by health consciousness of the population since most of the people aim at reducing weight and avoiding nutrition-related diseases (Lynch, 2011).

Technological Factors

Technology is the skills and the knowledge employed in the production of goods, services, and other sectors of the economy (Begi, 2010). Although Kenya is still behind in matters related to technology, the rate of technological advancement is increasing in Kenya (Begi, 2010). Various factors explain the level of technology in an economy, for example, in Kenya level of technology is determined by the factors described below.

Research and Development

The rate of research and development in most sectors of the country has improved. Kenya now spends most of its funds as well as time to employ scientists and various professionals who carry out research in various fields (Begi, 2010). The medical field, for example, improved due to the continuous research done by the professionals to help acquire additional knowledge on how to deal with different health conditions.

Rate of Technological Change

The country has been able to acquire advanced technological equipments from advanced countries such as the United States of America. This has advanced the quality of commodities or services in the country. With the increasing advancement of technology across the world, Kenya is expected to have a continuous technological growth until it achieves the highest levels of technology that is comparable to those of developed nations (Begi, 2010).

Automation

This is the application of machines in the production of goods and services (Begi, 2010). Kenya has not fully embraced automation because there are high levels of unemployment. For that reason, replacing the human labor with machines can worsen the situation (Begi, 2010). Although some of the industries have incorporated machines in their operations, most of the firms rely on human labor. As such, they have created job opportunities and improved the standards of living of the people (Begi, 2010).

Legal Factors

This involves various institutions that maintain law in the country. These institutions approve the operations of various business organizations in Kenya as may be permitted by the law (Millie & Das, 2008). It encompasses the court systems and the constitution.

Licensing

The law requires that all businesses have valid licenses, which justifies that their operations are in accordance with the Kenyan law. Small businesses such as the sole proprietor face challenges when it comes to obtaining licenses for their operations (Millie & Das, 2008). This is due to the money and the time spent in applying and acquiring the license. This has discouraged most of the entrepreneurs from venturing into various businesses.

Legal Businesses

The law has forbidden the production of goods or services that affect the lives of the people in the country (Millie & Das, 2008). This could be in the form of weapons and drugs, which are considered very harmful to the lives of the people. The Kenya Bureau of Standards (KEBS) also ensures that goods and services produced by organizations are up to the required standards. Contrary to this, such businesses are not permitted to produce these goods since they do not fully satisfy the needs of the consumers (Millie & Das, 2008).

Published Financial Statements

The law also requires some of the organizations to publish their financial statements to the public. For example, the public companies under the Companies Act are required to publish their annual financial statements to highlight their financial position and performance (Millie & Das, 2008). This will be of importance to potential investors who may be willing to invest in the country because such information is important for investment decisions.

Environmental Factors

The National Environmental Management Authority (NEMA) is responsible for the management of the environment in the country (Kenya) (Moore & Nelson, 2010). Many factors may be employed to determine the state of the environment in the country. Organizations must always operate to ensure no pollution beyond the set limits.

Water Crisis

Because of dense settlement, most of the lands have been occupied, leaving no space for the development of water sources. The people require clean drinking water and more to use in agriculture, livestock, and fishing (Moore & Nelson, 2010). These are crucial activities in the development of the Kenyan economy but without water, they cannot be carried out. Water crisis in the country has also discouraged most entrepreneurs from starting businesses in some of the areas within the country. This has contributed to imbalanced development in Kenya (Okidi, Mbote & Akech, 2008).

Pollution

This is another environmental factor in Kenya. Although environmental organizations such as NEMA have enacted various strategies to reduce the level of air, water, and land pollution in the country, it remains a problem for consideration (Moore & Nelson, 2010). The people avoid most polluted areas and starting any business in such areas becomes challenging due to the reduced market and sources of raw materials for production (Okidi, Mbote & Akech, 2008).

Unfavorable Climatic Conditions

Hot and dry climates are unfavorable for the survival of human beings. Most people tend to run away from these areas, leaving them scarcely populated. Even entrepreneurs are scared of venturing into such areas (Moore & Nelson, 2010). In other areas, floods have affected the lives of the people and operations of various business activities. Such environmental factors have affected the economic development of the country (Okidi, Mbote & Akech, 2008).

References

Begi, N. (2010). A Comparative Study Of Pre- School and Lower Primary School Teachers'' Computer Technology Usage in Teaching in Nairobi Province, Kenya. Saarbrucken: VDM Verlag Dr. Muller.
Gitari, D. & Knighton, B. (2009). Religion and politics in Kenya: essays in honor of a meddlesome priest. New York: Palgrave Macmillan.
Kabeer, N. (2003). Gender mainstreaming in poverty eradication and the Millennium development goals a handbook for policy-makers and other stakeholders. London Ottawa Quebec: Commonwealth Secretariat International Development Research Centre Canadian International Development Agency.
Lynch, G. (2011). I say to you ethnic politics and the Kalenjin in Kenya. Chicago: University of Chicago Press.
Majstorović, D. & Lassen, I. (2011). Living with patriarchy discursive constructions of gendered subjects across cultures. Amsterdam-Philadelphia: John Benjamins Publishing Company.
Millie, A. & Das, D. (2008). Contemporary issues in law enforcement and policing. Boca Raton: CRC Press.
Moore, K. & Nelson, M. (2010). Moral ground ethical action for a planet in peril. San Antonio, Tex: Trinity University Press.
Okidi, C., Mbote, P. & Akech. (2008). Environmental governance in Kenya: implementing the framework law. Nairobi: East African Educational Publishers.
Oyugi, W., Wanyande, P. & Mbai, C. (2003). The Politics of Transition in Kenya: from KANU to NARC. Nairobi, Kenya: Heinrich Boll Foundation.
Vink, P. (2012). Advances in social and organizational factors. Boca Raton, FL: CRC Press/Taylor & Francis Group.